Getting A Business Loan Without Personal Contribution

A professional business loan is a credit reserved exclusively for professionals, regardless of their legal status. It concerns the entire chain of actors: artisans, traders, and more generally Very Small Enterprise (VSEs), Small and Medium Enterprises (SMEs), and Support for Mortgage Interest (SMIs).

A professional loan can thus allow business leaders to equip themselves, acquire a business and/or premises, and sometimes finance a cash requirement.

What Is a Personal Contribution?

The personal contribution consists of a contribution made directly by the business manager or, more generally, by the community of associates, which will thus make it possible not to request 100% financing by the bank (110% in some cases). A personal contribution is generally requested by the banks and is a way for the banks to ensure that the entrepreneur also takes risks alongside them.

What Are the Criteria Needed by Lenders?

As a reminder, lenders are usually private companies subject to solvency ratios, known as “Basel 3”, which impose on them a capital ratio relative to the credits which are granted by the bank. This is why the banks are extremely careful about the documentation they accept.

The documentation for a business plan must also be credible and not too ambitious, or the loan will be refused. So be careful with the preparation and presentation of such documentation!

Finally, each lender defines its own criteria for accepting or refusing a professional loan request, and each lender is free to accept or decline a new client without having to justify why.

The Importance of the Contribution in Obtaining Professional Credit

When a business manager and his/her partners make a personal contribution, traditional lenders will help them obtain credit. However, alternative lending institutions can add to this contribution by initiating an loan of honor.

Focus on Loans of Honor

The honor loan is an equity contribution for the company. These loans are often granted to the person of the entrepreneur (and his associates if necessary), who can thus bring them to the company. If the latter is already established, this will go through the partners’ current account.

These loans of honor have a 0% interest and can finance material like immaterial (rare thing). With a general maximum amount of € 50,000, the organizations that grant these loans often request the backing of a bank loan.

Important: In some cases, you can even obtain a deferred reimbursement of 12 months.

What About Love Money?

Love money, a mechanism commonly practiced but still largely unknown, consists of soliciting the people close to you in order to finance your business project: parents, friends, and family can thus be involved in your project. And, importantly, it will also allow you to have an invested, outside look at your project. In this situation, it’s best to keep your comments to yourself (especially at the time of launch your company!), or you might find yourself alone.

If you want a professional loan, you should contact a company like Affinity Beyond Capital. Affinity Beyond Capital allows businesses to get in touch with the best lenders in the industry and quickly apply for loans online. It’s a streamlined platform that allows businesses to connect with different lenders and get an injection of cash to keep their business afloat or to start a new one altogether.

What is “the person”? This is not a typical phrase in the English language. Is it a representative? A banker? The accountant?